"Action will be taken if we find out that the rules of engagement were violated," General Officer Commanding-in- Chief of Army's Northern Command, Lt Gen. D S Hooda, told reporters here.
He said an inquiry has been ordered into the incident and hoped it will be completed within the next 10 days.
The Defence Ministry announced Rs.10 lakh each as compensation to the next of kin of 14-year-old Faisal and Mehraj-ud-din who were killed in the firing, while two others, Zahid Ayoub and Shakir Ahmad, who were injured will get Rs.Five lakh each. Basim Amin, a fifth occupant of the vehicle that was fired upon, escaped unhurt.
"Let me state this very clearly that we take responsibility for what happened (at Chattergam in Budgam)," he said.
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He said that while mistakes happen on the ground, "every time, lessons are learnt and it is our desire that procedures are put in place so that such incidents do not happen".
"It will be our focus to ensure that there is no repeat of such incidents in future," he said.
"We have very specific dos and don'ts for conducting operations, which have been passed down to the troops. These have been very clearly spelt out and if there is any violation of these, we will deal with it appropriately.
An inquiry has been ordered into the episode and it will be completed expeditiously, he said.
"It (inquiry) commenced the very next day (of the incident). As of now, 15 civilian witnesses have been examined. The service witnesses have been examined," he said.
"Hopefully, if all goes well and all the witnesses come in, we will have completed the inquiry in the next 10 days," he added.
The five youths were travelling in a white Maruti car from Nowgam to Suthsoo in Budgam district on Monday to witness a Muharram procession.
Disputing this version, Amin said they were not stopped at any point by the army personnel.